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Arthur Rubin
Arthur Rubin, Tax Preparer
Category: Tax
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Experience:  22 years of tax preparation experience, including individual, trust, and estate returns.
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Does a deceased person need a federal income tax return?

Resolved Question:

I received a 1099 for a credit card debt forgiveness that was in my husband’s name. It is for the year 2009 and he has been deceased since 2007. Do I have to fill out a federal income tax return for him even though he has been deceased for over two years?
Am I responsible for the taxes on this since it was in his name? There is no estate. Only the mortgage for the home. Is there a form I need to fill out for this.

Submitted: 7 years ago.
Category: Tax
Expert:  Arthur Rubin replied 7 years ago.


Thank you for using JustAnswer.

First, if it was a joint credit card, and you were responsible for the payments, even if on a secondary basis, then it's your debt that was cancelled, and only current insolvency (or insolvency at the time of cancellation) would prevent it from being taxable.

Otherwise, the question revolves around whether there was anything in the "estate" which could have paid the bill when he was deceased, and whether you would have owed the money now if it hadn't been forgiven.

If the "estate" was insolvent, and you were not responsible for the debt at the time, then you had best ignore it, as there is no entity which could file a return with form 982 to claim the exclusion. If the estate was solvent, then the estate or beneficiaries would owe the bank the money, and you'd have to see if you (I assume you're the beneficiary) would qualify for one of the current exemptions. See IRS form 982 and publication 4681 for the details, although the exemptions have been liberalized again. Michigan may have different laws, but it's likely the insolvency exemption would still be valid.

As for the estate's solvency, you need to consider the equity in the home (if positive), plus any real assets (such as bank accounts), less debt (ignoring the credit card debt forgiven). If less than 0, the estate would still be insolvent after the credit card debt was forgiven, and no tax would be due.

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Customer: replied 7 years ago.

My name was not on the credit cards in question. What do I do since they have sent a 1099 in his name and Social Security number? There was no estate since the house was in both our names and I still have a hefty mortgage on it. Is there a form I need to send into IRS since he has been deceased for 2 1/2 years?

Expert:  Arthur Rubin replied 7 years ago.

If you filed a joint 2007 tax return, it should have had his date of death on it, so the IRS should be aware of the situation.

I don't see any credible way this could be considered "income in respect of a decedent", which would then flow through to the beneficiary of his estate (probably you), as the debt should have been extinguished with the estate.

("Estate", here, is a technical term. On his death, a separate entity is created which has his taxable estate, whether or not there was actually anything in it.)

Customer: replied 7 years ago.

Do I need to do anything with these 1099C that are in his name for the year 2009 with IRS or just ignore them? I don't want to get into trouble if there is a form I need to fill out.

Expert:  Arthur Rubin replied 7 years ago.

You might get in trouble, but I don't think there's any form that you can fill out which would help. I'm sorry that I can't be more helpful.

If you get a demand letter that your husband reports some income, call the number on the letter and remind them that he's dead and has no further obligation to file tax returns. (Sorry, that was sarcastic.) You might want to ensure that his name is ***** ***** deposit accounts, just in case the demand latter is returned as deceased and the note the return but not the reason. It's possible that they might attempt to levy on an account with his name on it without informing you, only attempting to inform him.

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